CHRONIC UNEMPLOYMENT - At its Core it is About a Lack of Private Investment

Investment-Unemployment Link Still On Track 02-05-14 John B Taylor

CENTRAL BANK POLICY - Insider Says Central Banks Making it Up as They Go!

Former Central Banker Admits "[They] Are Making It Up As They Go Along" 03-03-14 Tim Price via Sovereign Man blog,via ZH

A few weeks ago, William White (former economist at the Bank of England, the Bank of Canada, and Bank of International Settlements) made a frank admission.

And while we search for assets whose prices are less obviously distorted by malign government intervention, it’s refreshing to hear a mea culpa from a member of the economics “profession”.

White said:

“The analytical underpinnings of what we [mainstream economists] do are actually pretty shaky. A reflection of that fact, is that virtually every aspect you can think of with respect to monetary policy, about best practice, has changed and changed repetitively over the course of the last 50 years. So, this stuff ain’t science.

“Think about what’s happened recently. One, its completely unprecedented. People are making it up as they go along. This is hardly science – building on the pillars of the past.

“Secondly, what they’ve been making up as they go along actually differs across central banks [The Bundesbank, for example, is fighting the threat of high inflation, whereas the Fed is more concerned about the prospect of deflation]. They can’t even agree amongst themselves about what’s the best way to do things.

“I’m becoming more and more convinced that all of the models we use are basically useless.

“It’s surprising that we’ve had this huge crisis that the mainstream didn’t predict. It’s gone on for years, which the mainstream absolutely didn’t predict. I would have thought this was a basis for a fundamental rethink about what we used to think we believed. But that hasn’t happened.

“The policies that we’ve followed – on the monetary side at least – since 2007 are just more of the same demand-stimulating policies that we’ve been following, I think, erroneously, for the last 30 years.

“We’ve got the potential to do so much harm by not getting the creation of fiat credit and money right. We’ve got the capacity to do so much harm that we should be focusing much more on making sure that doesn’t happen.”

Doctors at least have the Hippocratic Oath: first, do no harm. If only economists and central bankers had a similar ethic.

But they don’t. So they continue ‘making it up as they go along’, as Mr. White suggests, applying failed ideas with impunity and continued authority to an unquestioning public.

Warren Buffett famously compared financial markets to the card table, observing that if you’ve been playing poker for half an hour and you still don’t know who the patsy is, then you’re the patsy. It seems we are all patsies now.

You can listen to the full interview here:

�

WATER - EPA Defines "Water"

Fight Inequality With Better Jobs 03-02-14 Mort Zuckerman WSJ

The anemic recovery has left millions still out of work or underemployed. The long-term solution: education.

Adecade ago, before "income inequality" became a political watchword, the World Bank issued a report called "Beyond Economic Growth." The 2004 study concluded with this message: "An excessively equal distribution can be bad for economic efficiency. Take, for example, the experience of socialist countries where deliberately low inequality deprives people of the incentives needed for their active participation in economic activities." Among the consequences, the report noted, is "slower economic growth leading to more poverty."

That insight is in danger of being lost nowadays, when many Americans, encouraged by their political leaders, have come to view the U.S. economy as a winner-take-all system. The disequilibrium in the distribution of wealth today is not hard to discern: The wealthiest 1% has captured 95% of the growth of wealth between 2009 and 2013, while the bottom 90% has become poorer in real terms.

Yet these facts can distort the fundamental economic issue facing America. That issue is jobs—their scarcity and the quality of those that people manage to find.

The unemployment rate is about 13% if you take into account people "marginally attached" to the workforce. The Bureau of Labor Statistics reports that at the end of 2013

• There were about 27.3 million part-time jobs, making up about 18% of the workforce.
• Youth unemployment is a stunning 14%.
• It is particularly distressing that the labor participation rate has hit a 35-year low of 63.2%.
• This rate has dropped most noticeably for men and women in their prime earning years between the ages of 25 and 54 and is up only slightly for those 55 and over.

No wonder recovery is a dirty word to millions of Americans who continue to experience hardship five years after the Great Recession of 2008-09. On Friday, the Commerce Department announced that fourth-quarter economic growth for 2013 was even lower than predicted, coming in at a desultory 2.4%. That is bad news for Americans who need work.

Job losses in the low-wage and minimum-wage category is the critical issue of our day: Too many of the poor are not working full time or at all. Income inequality isn't so much the problem as income inadequacy.

A more robust economy, stoked by growth-oriented policies from Washington, would help produce the jobs and opportunities that millions of Americans need to climb the economic ladder.

A landmark new study by Harvard economics professor Raj Chetty asserts that advances in opportunity provided by expanded social programs have been offset by increased global trade and advanced technology that in turn have limited the traditional sources of middle-income jobs. But there is a simpler reason that the country remains mired in the weakest recovery from a recession since World War II: Government has diminished animal spirits by displaying a hostile attitude toward business.

That attitude is evident in everything from excessive corporate taxes to the incompetence and dishonesty of the ObamaCare rollout. Government is perpetually establishing economic policies and rules that business perceives as overregulation, dampening the willingness to invest—as witnessed by the slowest rate of capital investment in decades on corporate plant equipment and machinery.

What is to be done to restore upward mobility with more and better jobs? The key is education, and that is where policy makers should focus. The two main sectors seeing healthy job growth today are education and health care—where having a college education is essential. Those with less than a high-school diploma have an unemployment rate triple those with a college degree (3.2%).

Hoping for a return of manufacturing jobs for less-skilled workers is a pipe dream. Since 1979, the U.S. economy has added 45 million workers but has lost eight million manufacturing jobs. Technology has transformed the very nature of many industries:

Eastman Kodak an iconic photography company that in its heyday had 145,000 employees, filed for bankruptcy in 2012—the same year that Facebook paid $1 billion to buy the photo-related business Instagram, which had 13 employees.

Silicon Valley companies and others across the country report that many tech jobs go unfilled because they can't find knowledgeable workers. Firms are offshoring their science, technology, engineering and math (STEM) jobs given the lack of qualified technical workers at home. There is a shortage of skilled labor generally: Nearly one in four small businesses, according to a February 2014 National Federation of Independent Business survey, have at least one position open because they have few or no qualified applicants.

When technology jobs go begging, we inhibit startups in a field where each new job creates another five in the nearby community. As Enrico Moretti points out in "The New Geography of Jobs," a half-million new tech startup jobs translate into 2.5 million other new jobs.

Federal and state education policy should step up support for science, technology, engineering and mathematics, in tandem with organizations such as Project Lead the Way, Achieve and Techbridge in building interest in these subjects. Not every tech job requires a college education: Better job-training can prepare young people for these good-paying jobs. The Department of Commerce's Economics and Statistics Administration has found that employees in STEM jobs earn 26% more than workers in non-STEM positions.

We must also welcome people from abroad who are trained in STEM disciplines. That means restoring the H1-B visa admissions program to the higher levels of earlier years—195,000 a year compared with only 65,000 today. A high proportion of these immigrants start new businesses, which are the source of some three million new jobs a year. Another way to encourage startups would be a tax holiday for their first three years of business.

The political system is failing us.

Washington doesn't seem to be listening, as our political parties are focused more on ideological conflict than the good of the country. Their inability to respond forcefully and practically to America's needs is no longer tolerable. Our national leadership must respond before more lives are ruined.

Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report.

�

WATER - EPA Defines "Water"

�

Abnormal heat and cold temperature is resulting in Water shortages. This in turn is resulting in Food price increases.

�

GEO-ECONOMIC RISK - Ukraine

�

GEO-ECONOMIC RISK - Ukraine

Memo to Obama: This Was Their Red Line! 03-02-14 David Stockman, via his new blog Contra Corner via ZH

In 1783 the Crimea was annexed by Catherine the Great, thereby satisfying�the longstanding quest of the Russian Czars for a warm-water port. In fact, over the ages Sevastopol emerged as a great naval base at the strategic tip of the Crimean peninsula, where it became home to the mighty Black Sea�Fleet of the Czars and then the commissars.

For the next 171 years Crimea was an integral part of Russia—a span that exceeds the 166 years that have elapsed�since California was annexed by a similar thrust of “Manifest Destiny” on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego. While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian and Polish riffles, artillery and blood which famously annihilated The Charge Of The Light Brigade at the Crimean city of Balaclava in 1854;�they were Russians defending the homeland.

And the portrait of the Russian�”hero” hanging in Putin’s office is that�of Czar Nicholas I—whose brutal 30-year reign brought the Russian Empire to its historical zenith, and who was�revered in Russian hagiography as the defender of Crimea, even as he lost the 1850s war to the Ottomans and Europeans. Besides that, there�is no evidence that Putin does historical apologies, anyway.

In fact,�its their Red Line. When the enfeebled Franklin Roosevelt made port in the Crimean city of Yalta in February 1945 he did know he was in Soviet Russia.�Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later,�Nikita Khrushchev allegedly spent 15 minutes reviewing his “gift” of Crimea to his subalterns in Kiev in honor of the decision by their ancestors 300 years earlier to accept the inevitable and become a vassal of Russia.

Self-evidently, during the long decades of the Cold War, the West did nothing to liberate the “captive nation” of the Ukraine—with or without the�Crimean appendage bestowed upon it in 1954. Nor did it draw any red lines in the mid-1990?s when a financially desperate Ukraine rented back Sevastopol and the strategic redoubts of the Crimea to an equally pauperized Russia.

In short, in the era before we got our Pacific port in 1848 and in the 166-year interval since then, the security and safety of the American people�have depended not one wit on the�status of the Russian-speaking Crimea. Should the local population now choose fealty to the Grand Thief in Moscow over the ruffians and rabble who have seized Kiev, what’s to matter!� Worse still, how long can America survive the screeching sanctimony and mindless meddling�of Susan Rice and Samantha Power? Mr. President, send them back to geography class;�don’t draw any�new Red Lines. This one has been morphing for centuries among the�quarreling tribes, peoples, potentates, Patriarchs�and pretenders of a small region that is none of our damn business.

GEO-ECONOMIC RISK - Ukraine

Ukraine Crisis: Crimea in the Crosshairs 03-01-14 Geo-Political Monitor

What is unfolding between Ukraine and Russia on the Crimean Peninsula? The answer is ostensibly simple: Russia is defending its interests at the behest of the mostly ethnic Russian population in Crimea. And while there are reports of an imminent Russian invasion, the fact is that Russia already has troops on the ground in Crimea, given that they have leased a major military base in Sevastopol.

The port of Sevastopol serves as the headquarters of the Russian Black Sea Fleet, which oversees maritime operations throughout the Mediterranean. The base is leased through 2042, and the Russian fleet stationed there consists of 380 ships, 170 aircraft, and 25,000 troops. Crimea and Sevastopol in Ukraine represent a powerful means to exert pressure against Russia considering the fact that Moscow views the region as an indispensable strategic asset. In view of the street protests that have brought Ukrainian nationalists into power (not necessarily many ‘democrats’ here), and fearing a similar action on the part of the same political party in Crimea, Russia’s President Putin ordered a general mobilization of the western military region under the guise of ‘emergency exercises’ along with two districts of the central military region. This move masked a de facto preparation for some 2,000 troops to enter Crimea along with a squadron of helicopters. These steps give Russia a rapid response capability in the event that some battalions of the Ukrainian armed forces attempt to reach Crimea – they are also deploying air defense systems already in place at the base.

The arrival and deployment (even partial) of Russian troops has not been followed by shoot-outs with police departments in Crimea, nor has the new government in Kiev issued any orders to its armed forces, which continue to maintain a ‘passive’ attitude. Russia now has effective control of Simferopol, the naval base of Sevastopol, and Balaklava - every airport on the Crimean peninsula. Russian military units also surround regional support facilities for the Ukrainian armed forces, as well as an important air defense base north of Sevastopol.

How will the situation evolve?

Russian troops will continue to flow into Crimea if the Russian Duma – a bit of a rubber stamp – approves Putin’s request (it has already passed a resolution urging the government to consider all options to ensure the safety and stability of the Crimea). Approval would mean Russian helicopters could be deployed in greater numbers in order to further discourage a response from the Ukrainian army – which remains highly unlikely. In fact, even if Russia made a complete bid to take over Crimea, there is little chance of a Ukrainian military response.�Effectively, the Crimean peninsula is already being controlled by the Russian Federation and Putin’s recent moves are merely designed to protect or consolidate that control. Russia’s armed forces can be deployed so quickly and in such numbers that it will be impossible for the Ukrainian army to oppose.

Tensions will definitely rise over the announced referendum on Crimean independence, scheduled for 30 March. This suggests that Russian troops will remain on high alert protecting the pro-Russian Crimean government until that time and beyond. In the unlikely event of a Ukrainian response, the much better equipped Russian troops would extend their reach and gain control of eastern Ukraine’s most important industrial and mining districts, replicating in a sense, though on a smaller scale, what happened in Georgia in 2008. For now we can say with relative certainty that the Russian Federation after sixty years – when a possibly drunken Khrushchev ‘donated’ it to Ukraine – has taken full control of the Crimean peninsula, and it will do whatever is necessary to keep it.

GEO-ECONOMIC RISK - Ukraine

"Welcome To The Era Of Failed States" 03-03-14 James H. Kunstler of Kunstler.com, via ZH

So, now we are threatening to start World War Three because Russia is trying to control the chaos in a failed state on its border — a state that our own government spooks provoked into failure? The last time I checked, there was a list of countries that the USA had sent troops, armed ships, and aircraft into recently, and for reasons similar to Russia’s in Crimea: the former Yugoslavia, Somalia, Afghanistan, Iraq, Libya, none of them even anywhere close to American soil. I don’t remember Russia threatening confrontations with the USA over these adventures.

The phones at the White House and the congressional offices ought to be ringing off the hook with angry US citizens objecting to the posturing of our elected officials. There ought to be crowds with bobbing placards in Farragut Square reminding the occupant of 1400 Pennsylvania Avenue how ridiculous this makes us look.

The saber-rattlers at The New York Times were sounding like the promoters of a World Wrestling Federation stunt Monday morning when they said in a Page One story:

“The Russian occupation of Crimea has challenged Mr. Obama as has no other international crisis, and at its heart, the advice seemed to pose the same question: Is Mr. Obama tough enough to take on the former K.G.B. colonel in the Kremlin?”

Are they out of their chicken-hawk minds over there? It sounds like a ploy out of the old Eric Berne playbook: Let’s You and Him Fight. What the USA and its European factotums ought to do is mind their own business and stop issuing idle threats. They set the scene for the Ukrainian melt-down by trying to tilt the government their way, financing a pro-Euroland revolt, only to see their sponsored proxy dissidents give way to a claque of armed neo-Nazis, whose first official act was to outlaw the use of the Russian language in a country with millions of long-established Russian-speakers. This is apart, of course, from the fact Ukraine had been until very recently a province of Russia’s former Soviet empire.

Secretary of State John Kerry — a haircut in search of a brain — is winging to Kiev tomorrow to pretend that the USA has a direct interest in what happens there. Since US behavior is so patently hypocritical, it raises the pretty basic question: what are our motives? I don’t think they amount to anything more than international grandstanding — based on the delusion that we have the power and the right to control everything on the planet, which is based, in turn, on our current mood of extreme insecurity as our own ongoing spate of bad choices sets the table for a banquet of consequences.

America can’t even manage its own affairs. We ignore our own gathering energy crisis, telling ourselves the fairy tale that shale oil will allow us to keep driving to WalMart forever. We paper over all of our financial degeneracy and wink at financial criminals. Our infrastructure is falling apart. We’re constructing an edifice of surveillance and social control that would make the late Dr. Joseph Goebbels turn green in his grave with envy while we squander our dwindling political capital on stupid gender confusion battles.

The Russians, on the other hand, have every right to protect their interests along their own border, to protect the persons and property of Russian-speaking Ukrainians who, not long ago, were citizens of a greater Russia, to discourage neo-Nazi activity in their back-yard, and most of all to try to stabilize a region that has little history and experience with independence. They also have to contend with the bankruptcy of Ukraine, which may be the principal cause of its current crack-up. Ukraine is deep in hock to Russia, but also to a network of Western banks, and it remains to be seen whether the failure of these linked obligations will lead to contagion throughout the global financial system. It only takes one additional falling snowflake to push a snow-field into criticality.

Welcome to the era of failed states. We’ve already seen plenty of action around the world and we’re going to see more as resource and capital scarcities drive down standards of living and lower the trust horizon. The world is not going in the direction that Tom Friedman and the globalists thought. Anything organized at the giant scale is now in trouble, nation-states in particular.� The USA is not immune to this trend, whatever we imagine about ourselves for now.�

GEO-ECONOMIC RISK - Ukraine

The Backstory to the Russia-Ukraine Confrontation: The U.S. and NATO Encirclement of Russia 03-03-14 George Washington Blog via ZH

The American press portrays Putin as being the bad guy and the aggressor in the Ukraine crisis.

Putin is certainly no saint. A former KGB agent, Putin's net worth is estimated at some $40 billion dollars ... as he has squeezed money out of the Russian economy by treating the country as his own personal fiefdom. And all sides appear to have dirt on their hands in the Russia-Ukraine crisis.

But we can only see the bigger picture if we take a step back and gain a little understanding of the history underlying the current tensions.

Indeed, the fact that the U.S. has allegedly paid billions of dollars to anti-Russian forces in Ukraine - and even purportedly picked the Ukrainian president - has to be seen in context.

Veteran New York Times reporter Steven Kinzer notes at the Boston Globe:

From the moment the Soviet Union collapsed in 1991, the United States has relentlessly pursued a strategy of encircling Russia, just as it has with other perceived enemies like China and Iran. [Background here, here and here.] It has brought 12 countries in central Europe, all of them formerly allied with Moscow, into the NATO alliance. US military power is now directly on Russia’s borders.

“I think it is the beginning of a new cold war,” warned George Kennan, the renowned diplomat and Russia-watcher, as NATO began expanding eastward. “I think the Russians will gradually react quite adversely, and it will affect their policies.”

Stephen Cohen - professor emeritus at New York University and Princeton University who has long focused on Russia - explained this weekend on CNN:

We are witnessing as we talk the making possibly of the worst history of our lifetime. We are watching the descending of a new cold war divide between west and east, only this time, it is not in far away Berlin, it's right on Russia's borders through the historical civilization in Ukraine. It's a crisis of historic magnitude. If you ask how we got in it, how we got into the crisis, and how therefore do we get out, it is time to stop asking why Putin - why Putin is doing this or that, but ask about the American policy, and the European Union policy that led to this moment.

***

I don't know if you your listeners or views remember George Kennan. He was considered [a] great strategic thinker about Russia among American diplomats but he warned when we expanded NATO [under Bill Clinton], that this was the most fateful mistake of American foreign policy and that it would lead to a new Cold War. George lived to his hundreds, died a few years ago, but his truth goes marching on. The decision to move NATO beginning in the 90's continuing under Bush and continuing under Obama, is right now on Russia's borders.

And if you want to know for sure, and I have spent a lot of time in Moscow, if you want to know what the Russian power elite thinks Ukraine is about, it is about bringing it into NATO. One last point, that so-called economic partnership that Yanukovych, the elected president of Ukraine did not sign, and that set off the streets - the protests in the streets in November, which led to this violence in and confrontation today, that so-called economic agreement included military clauses which said that Ukraine by signing this so called civilization agreement had to abide by NATO military policy. This is what this is about from the Russian point of view, the ongoing western march towards post Soviet Russia.

Jonathan Steele writes at the Guardian

Both John Kerry's threats to expel Russia from the G8 and the Ukrainian government's plea for Nato aid mark a dangerous escalation of a crisis that can easily be contained if cool heads prevail. Hysteria seems to be the mood in Washington and Kiev, with the new Ukrainian prime minister claiming, "We are on the brink of disaster" as he calls up army reserves in response to Russian military movements in Crimea.

Were he talking about the country's economic plight he would have a point. Instead, along with much of the US and European media, he was over-dramatising developments in the east, where Russian speakers are understandably alarmed after the new Kiev authorities scrapped a law allowing Russian as an official language in their areas. They see it as proof that the anti-Russian ultra-nationalists from western Ukraine who were the dominant force in last month's insurrection still control it. Eastern Ukrainians fear similar tactics of storming public buildings could be used against their elected officials.

Kerry's rush to punish Russia and Nato's decision to respond to Kiev's call by holding a meeting of member states' ambassadors in Brussels today were mistakes. Ukraine is not part of the alliance, so none of the obligations of common defence come into play. Nato should refrain from interfering in Ukraine by word or deed. The fact that it insists on getting engaged reveals the elephant in the room: underlying the crisis in Crimea and Russia's fierce resistance to potential changes is Nato's undisguised ambition to continue two decades of expansion into what used to be called "post-Soviet space", led by Bill Clinton and taken up by successive administrations in Washington. At the back of Pentagon minds, no doubt, is the dream that a US navy will one day replace the Russian Black Sea fleet in the Crimean ports of Sevastopol and Balaclava.

***

Vladimir Putin's troop movements in Crimea, which are supported by most Russians, are of questionable legality under the terms of the peace and friendship treaty that Russia signed with Ukraine in 1997. But their illegality is considerably less clear-cut than that of the US-led invasion of Iraq, or of Afghanistan, where the UN security council only authorised the intervention several weeks after it had happened. [Indeed, top American leaders admit that the Iraq war was for reasons different than publicly stated. And the U.S. military sticks its nose in other countries' business all over the world.� And see this.] And Russia's troop movements can be reversed if the crisis abates. That would require the restoration of the language law in eastern Ukraine and firm action to prevent armed groups of anti-Russian nationalists threatening public buildings there.

Again, we don't believe that there are angels on any side.� But we do believe that everyone has to take a step back, look at the bigger picture, calm down and reach a negotiated diplomatic resolution.

And see�this, this, this and this (interview with a 27-year CIA veteran, who chaired National Intelligence Estimates and personally delivered intelligence briefings to Presidents Ronald Reagan and George H.W. Bush and the Joint Chiefs of Staff).

CRONY CPAITALISM - Theft on Grand Scale

Missing Military-Industrial-Complex Money 02-19-14 batr.org

�

�